Japan: Solar Frontier to launch investment company

Japanese thin film manufacturer Solar Frontier will form an investment company with the Development Bank of Japan (DBJ) to provide financing for 100 MW of photovoltaic power plants a year. The company will look to finance projects currently under development and to develop projects outright, for sale to Independent Power Producers (IPP) and investors.

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Under Japans revamped FITs, the countrys utility scale photovoltaic market continues to develop at pace. To facilitate this development, CIGS module manufacturer Solar Frontier has entered into an agreement with the DBJ to create a company to fund and then sell photovoltaic power plants. Solar Frontier will provide 60% of the capital for the company, with the DBJ 40%.

Downstream capabilities and the developing of projects has proven a profitable strategy for some photovoltaic manufacturers, with a standout example being the only other large-scale thin film manufacturer First Solar. The American CdTe manufacturer and integrators aggressive moves into the downstream market segment was highlighted this week with its acquisition of Chilean developer Solar Chile.

A Principal Photovoltaic Analyst with IHS i-Suppli, Stefan de Haan, told pv magazine that the downstream business is also paying off for the Japanese producer. Solar Frontier is doing very well because of their downstream business in Japan, said de Haan. However he does offer one word of caution. "Of course at some point not too far in the future, all these module producers integrating downstream will have to make a decision: Do I want to be in a low margin, large scale commodity business such as module production or in a high margin, high overhead cost, diversified project business? Both models will work on their own, but the combination in one company will soon become problematic."

Projects big and small

The statement announcing the Solar Frontier and DBJ investment company was released today, and it said that the new company will invest in projects of various size, including those with land that have been stalled through a lack of finance. The statement indicates that projects smaller than 2 MW are proving difficult to finance and therefore are a target for the new company. pv magazine understands that projects smaller than 2 MW are particularly interesting in Japan because they face less challenges in getting grid connected.

The joint investment company will become an IPP itself however it will also be funding parks ready for sale. The sale of a completed and operational plant in Japan should be relatively uncomplicated as the stable returns under the generous FITs are very attractive.

Solar Frontiers Brooks Herring told pv magazine that the company is working with EPCs to deliver a "one stop shop" service for companies looking to profit under the revamped FITs. "There are a number of people who come to us already with land and they are looking for somebody to do the rest of the work, because they have already secured the land." Herring indicates that Solar Frontier has had a strong Q4 2012 and expects a very active Q1 2013 also.

The new joint investment company will open in February 2013.

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Jonathan Gifford

Jonathan is the Founding Editor of pv magazine Australia. Jonathan joined pv magazine in 2011 and became the Editor in Chief in 2014.

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